October 15, 2010 - A ruling Democratic Party of Japan (DPJ) committee recommended not raising cigarette taxes next year after this year’s 40 percent increase because the government should examine the impact on tobacco farmers and manufacturers.

Background: “We should aim to boost the tax again next fiscal year,” Yoko Komiyama, a member of Japan’s ruling party and a leader of a group of about 70 lawmakers seeking higher cigarette levies, said in an interview in Tokyo. “The planned increase next month is just the first step and isn’t nearly enough.” (Japanese lawmakers want to triple cigarette prices..)

Komiyama said the aim should be a price of 1,000 yen (11.68 USD) a pack, which would bring Japan in line with some European countries. The government could raise the price by about 100 yen (1.17 USD) every year to allow the nation’s tobacco leaf farmers enough time to switch to other crops, Komiyama said. “A consensus is growing in the government that we have to do more to discourage things like smoking that are harmful to health,” she said in an interview on Sept. 9.

Japan Tobacco, which controls 65 percent of the domestic market, “strongly opposes” a further tax increase until the affect of the October price change is assessed, the company said in a statement on Aug. 31.

The DPJ’s fiscal panel released its tax reform proposal today, October 13th calling for a “cautious” approach in raising tobacco taxes after this month’s record increase lifted the price of a pack of cigarettes by one-third to about 410 yen ($5).The recommendations may complicate Prime Minister Naoto Kan’s efforts to increase government revenue to pay for social welfare programs. The administration is seeking to ensure economic growth while reining in the world’s largest public debt.

Japan is the fourth-largest market by volume for the world’s tobacco makers, after China, the U.S. and Russia, according to a report from U.K.-based market researcher ERC Group. The DPJ panel said Japan should consider raising cigarette taxes to the levels of Western countries in the future for health reasons.